(RTTNews) – Extending gains from the four previous sessions, crude oil prices have surged on Thursday, with expectations of an early reopening of the Strait of Hormuz sinking after U.S. President Donald Trump announced stringent economic measures against Iran.
WTI Crude Oil for September month delivery was last seen trading up by $2.01 (or 2.34%) at $87.84 per barrel.
Today, Trump announced through Truth Social crushing economic operations against Iran at an unprecedented scale for failing to strike a deal with the U.S. despite being given several opportunities.
Calling it an economic D-day on Iran, Trump also warned that any country offering any form of assistance to Iran would face the same consequences. Of note, China is a key beneficiary for Iran’s oil market, buying nearly 90% of sanctioned Iranian oil.
Over the past few weeks, Trump has been alternating with opposite stances against Iran.
On the one hand, he expressed optimism on peace talks and claimed the negotiations to be going on smoothly while on the other, he made a series of military and economic threats against the nation.
Hours before posting today’s message, Trump stated that negotiations with Iran for a deal could resume at some point and reiterated that the U.S. has complete control over the Strait of Hormuz. However, he did not add any direct or indirect military threats.
Iran dismissed Trump’s warnings and called it a diversionary tactic to hide the attention from the $40 trillion national debt the U.S. currently has due to its failed policies.
Yesterday, an update from the U.S. Department of Treasury revealed U.S. debt surpassed $40 trillion for the first time in history.
Trump’s message is seen by analysts as an effort to isolate Iran in the Arabian Gulf.
Yesterday, the United Arab Emirates announced halting all trade and financial transactions with Iran after accusing Iran’s Islamic Republic Guards Corps of launching two ballistic missiles in its territory on Tuesday.
With both the U.S. and Iran freely exchanging strong rhetoric indicating their hardened stances, traders are pricing in an extended delay in the Strait of Hormuz reopening.
Today’s escalation has dimmed prospects for both a renewal of a ceasefire and a fresh diplomatic agreement in the near-term.
The shipping traffic across the strait has dwindled to single digits.
Citing data from Kpler, Reuters reported that only nine commercial vessels with active Automatic Identification System transponders traversed the Strait of Hormuz on August 19.
Earlier, CNN reported, citing Kpler’s data, that nearly 80% of tracked vessels navigated through Omanian territorial waters.
Yesterday, speaking with Axios, Trump repeated his claim that a massive amount of oil moved through the seaway.
In stark contrast, Iranian officials maintained that the strait is closed and asserted that vessels require Iranian permission and oversight for safe transits.
Oil and energy flows through the narrow seaway are down to nearly 11% of pre-war levels, leaving diesel and refined fuel markets to suffer an intense squeeze.
The U.S. dollar index was last seen trading at 98.93, up by 0.10 (or 0.10%) today.
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